Urgent Warning: Bank of Korea Stablecoins Deemed Perilous by Union

Key Points

1. The Bank of Korea (BOK) union opposes Korean won-pegged stablecoins, viewing them as a form of 'shadow banking' that could destabilize the financial system.

2. Stablecoins, while designed to minimize volatility, pose risks such as IT vulnerabilities, liquidity issues, and operational failures, as highlighted by the BOK union.

3. The collapse of TerraUSD (UST) serves as a cautionary example, reinforcing the BOK union's concerns about stablecoin risks and potential economic contagion.

4. Global regulators are developing frameworks to address stablecoin risks, with the EU's MiCA and Japan's laws being notable examples.

5. The BOK union's warning underscores the tension between financial innovation and stability, advocating for stricter regulations to mitigate systemic risks.